Understanding Borrowing and Financial Terms

What is borrowing?

• Lending money to a financial institution

• Receiving a gift from a financial institution

• Getting a sum of money from a financial institution to be paid back with interest

• Getting a sum of money from a friend

What is a loan?

• A financial grant

• A type of savings account

• A sum of money borrowed from a financial institution and paid back in instalments

• A gift from a financial institution

What is collateral?

• A type of loan

• Something of value promised to the lender in case of non-payment

• A financial institution

• A guarantor

Who is a guarantor?

• A bank manager

• A person who agrees to pay the loan if the applicant cannot

• A financial advisor

• A loan applicant

What is a mortgage?

• A loan to buy a car

• A loan to buy a house or property, repaid over a long period

• A short-term loan

• A type of insurance

What does APR stand for?

• Annual Payment Rate

• Annual Percentage Rate

• Annual Premium Rate

• Annual Principal Rate

What is hire purchase (HP)?

• A method to lease goods permanently

• A way to use goods while paying them off

• A type of loan for education

• A savings plan

What is leasing?

• Using goods for a period without owning them

• A financial penalty

• Owning goods after a period of time

• A type of mortgage

What is a debt?

• A sum of money that is owed or overdue

• A type of investment

• A financial gain

• A savings account

What is the main difference between a loan and a mortgage?

• A loan is for buying property, a mortgage is for any purpose

• A loan is always interest-free, a mortgage is not

• A mortgage is for buying property, a loan can be for various purposes

• A mortgage is short-term, a loan is long-term